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IPO Analysis: Columbia Pipeline Partners LP (NYSE: CPPL)

By Roger S. Conrad on Nov. 18, 2014

Columbia Pipeline Partners LP’s (NYSE CPPL) initial asset base comprises midstream infrastructure accumulated by NiSource (NYSE: NI) when the utility industry consolidated in the 1990s.

Whereas Dominion Midstream Partners LP (NYSE: DM) received only a fraction of Dominion Resources’ (NYSE: D) midstream assets, Nisource has elected to contribute all of its pipeline, storage and processing assets into an operating company (OpCo) in which Columbia Pipeline Partners will own a 14.6 percent interest.

The OPCO setup has become increasingly popular among recent initial public offerings (IPO), including Midcoast Energy Partners LP (NYSE: MEP) and Westlake Chemical Partners LP (NYSE: WLKP).

NiSource will split off its OpCo stake and its equity and general partner interests in Columbia Pipeline Partners in a separate publicly traded entity, Columbia Pipeline Group (NYSE: COLP), unlocking shareholder value by offering pure-play exposure to its midstream growth story.

(Click flow chart to expand.)NI COLP Split

Under this separation plan, NiSource shareholders would retain their current interest in the utility and receive a pro-rate dividend of shares in Columbia Pipeline Group in a tax-free transaction. NiSource’s split into a regulated electric and gas distribution utility and a pure-play midstream company is expected to take place in mid-2015.

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